Protect Armed Forces Compensation Scheme payments with a trust

Compensation received under the Armed Forces Compensation Scheme can reduce or stop entitlement to means-tested benefits. The answer is to set up a trust for what is personal injury compensation.

Armed Forces Compensation Scheme is one of a number of compensation schemes administered by Veterans UK on behalf of the Ministry of Defence. The scheme is for serving and former serving personnel for any injury, illness or death which is caused by service on or after 6 April 2005.

Those in the services may also bring civil claims for compensation and that personal injury compensation can be protected by a trust.

A compensation trust can protect a wide range of payments which “are derived from a payment made in consequence of any personal injury to the claimant…” The term personal injury means more than just a physical injury.

Avoid thinking trusts are different for service and ex-military personnel. If the payment is for a personal injury it can be protected with a trust.

That means a payment made under an insurance policy can be protected by a trust. There are a variety of names given to policies, like Personal Accident insurance or Permanent Health Insurance. Provided the reason for payment is the personal injury, a trust can be used to protect your ability to claim means-tested benefits and financial support for care.

Even if you do not think you need benefits immediately, there is sense in setting up a trust to help protect your future.

About Mark Thompson

Personal injury and accident specialist solicitor
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2 Responses to Protect Armed Forces Compensation Scheme payments with a trust

  1. andy says:

    hi Mark i have currently been given a one of gratuity payment of £11,737 for injuries from military service,this was under the AFPS 75 the scheme before the new military changes of 2005, i have currently been receiving esa income and contribution based since along with housing and council tax benefit since 2011,this was when i was first diagnosed with ptsd then further with a related knee injury,i have notified the dwp even though i have not received payment,as this is just a one of payment and i am not getting any more how adversely would this affect my benefit,do i need a trust,i was hoping to buy a car as i badly need one for hospital trips etc instead of relying on family and friends all the time …many thanks

    • Mark Thompson says:

      You should be able to hold this payment in trust and keep your full benefit entitlement. The benefit regulations state that a payment made in consequence of a personal injury to you can be protected in a trust.

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